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Nokia Tango

|Includes:Nokia Corporation (NOK)

Nokia produced mixed results for Q2 today, making commentators dance the tango with its numbers. Doing lots of dramatic turns, as tango dancing requires, is a major Finnish custom; more Finns tango per capita than Argentines. So over to NOK.

Its earnings at euros 5.7 billion ($4.4 billion or so) beat, because EPS was a big round zero while analyst consensus forecast a 3 eurocent loss. (Tangle legs sexily around your Canadian partner.)

In International Financial Reporting System (deep bend) NOK booked a 6 eurocent loss however, but its latest IFRS H1 loss is now only 13 eurocents vs 17 eurocents earlier (Swirl skirt.)

Yet sales were c10% below (Reuters) forecasts, up 5.4% in the quarter to 11.7 million phones, of which 7.4 million were Lumia models with windows. (Sharp bend.) The feature phones it is phasing out accounted for the rest. (Twirl.)

Note that the acquisition of the joint venture with Siemens (NSN) will be closed this quarter. (Wait for another milonga in 3 months.) It has a dramatic high-heeled operating margin (non-IFRS) of 11.8% vs 3.4% for cellphones. For Q3 NOK is dancing cautiously, predicting higher sales but a net operating margin level on those sales of 2% to minus 6%. (Time for tangoterapia).

The Canadian partner is CEO Stephen Elop who intends to continue to push its smartphone in North America despite their fall to barely over a half million sales in Q2, down. What Elop now needs is some Mad Men to bring the pizzazz up to the technology level at NOK. Under former CEO and then Chairman Jorme Olilla, with a background in banking and a yen for Finnish politics, NOK promoted itself brilliantly. The next CEO, Olli-Pekka Kallasvuo, fell down on the dance floor and was fired.

Elop's prepared statement claimed "an underlying operating profit for the 4th consecutive quarter". He also stated that at end Q2 NOK had "a strong balance sheet and solid cash position (gross cash of euros 9.5 billion and net cash of 4.1 billion." I have no idea if Mr. Elop can dance on what he once called "a burning ship". He claims that Lumia sales in Q2 demonstrate "momentum for the ecosystem" so I suspect he is a nerd.

(Swoop partner to the floor.) Separately, yesterday NSN made the lowest bid in the China Mobile tender for 4G base stations, beating out Huawei and ZTE, Chinese rivals.

Disclosure: I am long NOK.

Stocks: NOK